Canadian housing market to moderate in 2019 but growth to continue in Ontario and Toronto

By Wayne Karl

Canada’s housing market should see a moderation in both housing starts and sales, while home prices are expected to reach levels that are more in line with economic fundamentals such as income, job and population growth. This forecast for 2019 and 2020 is drawn from the 2018 Housing Market Outlookfrom the Canada Mortgage and Housing Corp. (CMHC).

Source: CMHC Housing Market Outlook

Nationally, CMHC’s outlook for 2019 projects total housing starts to edge down and range between 193,700 to 204,500, with the downward trend expected for both single and multi-unit starts. MLS sales are expected to be between 478,400 and 497,400 units annually while MLS prices should lie between $501,400 and $521,600.

“Our key takeaway from this year’s outlook is moderation in Canada’s housing markets for 2019 into 2020,” says Bob Dugan, chief economist, CMHC. “Housing starts are expected to decline from the higher levels we’ve seen recently. We expect resales in 2019 and 2020 to remain below recent peaks while prices should reach levels that are more in line with economic fundamentals such as income, job and populations growth.”

Ontario recovery

After dampened market activity in 2018, existing home sales and housing starts in Ontario, particularly in single-family homes, will post a partial recovery in 2019. Buyers are expected to re-enter the market on the strength of stronger than expected job growth and in-migration, before the downward trend in starts and sales resumes in 2020.

Source: CMHC Housing Market Outlook

GTA growth

With balanced conditions prevailing in the GTA, CMHC expects moderate sales growth and home prices growing in line with inflation. The rising costs of homeownership will result in strong rental demand, while new supply will add some upward pressure on vacancy rates. Toronto buyers should see more housing choices as builders concentrate their efforts on new highrise projects.

OTHER REGIONAL HIGHLIGHTS

BRITISH COLUMBIAHousing starts activity and MLS sales in BC should moderate, as economic and population growth slows while MLS average prices are expected to see a flatter growth profile through 2020.

VancouverOver the next two years, Metro Vancouver’s resale market will see lower sales, higher inventories of homes for sale and lower home prices compared with recent market highs. Through 2018, demand and home prices softened across all market segments and local geographies.

PRAIRIESBuyers’ market conditions in Alberta and Saskatchewan should gradually shift to a balanced market with gradual improvement in economic and demographic fundamentals. Balanced market conditions in Manitoba are expected to continue.

CalgaryVarious factors will push and pull the demand for housing in Calgary in 2019 and 2020. Calgary’s economy will experience stronger growth in population and employment. This will help support demand and lift sales in 2019 and 2020. However, the average MLS price will continue to face downward pressure but is expected to stabilize in 2019 and modestly rise in 2020.

QUEBECHousing starts and sales of existing homes will both be sustained, however, slower economic growth and rising borrowing costs will moderate activity through 2020. Starts will continue to be dominated by the apartment market segment, while demand for resale single-detached homes will remain relatively strong.

MontrealIn 2018 and 2019, rental housing demand will increase slightly faster than supply in Montreal, which will put some downward pressure on the vacancy rate. Demand will be supported by rising net migration over the forecast horizon.

ATLANTIC CANADAThe Atlantic region will see sustained activity, notably in Nova Scotia, where existing home sales and average prices should trend higher while rental demand will drive growth in apartment construction.

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CMHC reports housing starts realizes large gain in November 2017

Trend in housing starts reached its highest level in almost 10 years, reflecting a second consecutive increase in multiple starts

OTTAWA (CNW) — The trend in housing starts was 226,270 units in November, compared to 216,642 units in October, according to Canada Mortgage and Housing Corporation (CMHC). This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

“The trend in housing starts reached its highest level in almost 10 years this November, reflecting a second consecutive increase in multiple starts,” said Bob Dugan, CMHC’s chief economist. “This largely reflects construction of multiple units in Toronto, where evidence of overbuilding is low due to the decreasing inventory of completed and unabsorbed multiple units and strong demand.”

Monthly Highlights

Toronto

Total housing starts in the Toronto Census Metropolitan Area (CMA) trended higher in November. Multiple-family dwelling starts trended significantly higher and contributed to the overall increase. Given escalating house prices of single-detached homes, more homebuyers continued to shift demand towards lower priced condominium apartments and townhomes. Higher sales of pre-construction condominium units in the past two years will continue to break ground throughout this year resulting in more condominium apartment starts.

Guelph

Guelph builders started 269 homes in November, significantly higher than the 62 homes started a year ago. This increase was due to the jump in apartment starts, which are above the 10-year average in response to strong demand from downsizing seniors, young households, immigrants and students. The rental market in Guelph is tight with a vacancy rate of 1.2 per cent. The strong demand for rental apartments has translated into more apartment starts. Single-detached and townhouse starts are lower this year. Fewer lowrise new home sales this year have translated into lower starts.

Kitchener-Cambridge-Waterloo

Kitchener–Cambridge–Waterloo builders started 658 homes in November, significantly higher than the 222 homes started a year ago. For the first 11 months of 2017, single-detached starts are lower, while starts for townhouses are up 51 per cent and for apartments, 26 per cent. Demographics are playing a role in new home construction, as there has been a shift to smaller households. One-person households, couples without children households and lone-parent households are increasing at a much faster pace than couples with children households, which stimulates demand for affordable options such as townhouses and apartments.

London

Total housing starts in London CMA posted one of the highest levels ever recorded for the month of November. Strong population growth and a low supply of resale home listings have strengthened demand for new single-detached homes, resulting in a 13 year high for single-detached starts during the month of November. In addition, stronger rental demand this year, indicated by the lowest vacancy rate since 2001, has already led to a higher number of apartment starts this year than the annual record set in 2016.

Vancouver

Seasonally adjusted monthly starts in the Vancouver CMA were lower in November mostly due to a pullback in apartment starts as the construction sector remains at full capacity. Fewer multi-family condo and rental projects are getting underway in the City of Vancouver, Richmond, and on the North Shore, meanwhile, Burnaby and New Westminster have observed higher multi-family starts so far in 2017, relative to the same period last year.

CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of Canada’s housing market. In some situations, analyzing only SAAR data can be misleading, as they are largely driven by the multi-unit segment of the market, which can vary significantly from one month to the next.

The standalone monthly SAAR of housing starts for all areas in Canada was 252,184 units in November, up from 222,695 units in October. The SAAR of urban starts increased by 14.4 per cent in November to 235,412 units. Multiple urban starts increased by 16.9 per cent to 175,016 units in November. Single-detached urban starts increased by 7.5 per cent, to 60,396 units.

Rural starts were estimated at a seasonally adjusted annual rate of 16,772 units.

As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.

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Since 1989 Men At Work has specialized in renewing and enlarging older houses in core Toronto neighbourhoods. We are experts in managing the challenges of renovating sensitive old buildings into beautiful, functional, comfortable living spaces.

Cosentino is a global, family-owned company that produces and distributes high value innovative surfaces for the world of architecture and design, leaders in their respective segments such as Silestone® Quartz surfaces and Dekton® Ultracompact surfaces. Technologically advanced surfaces that create unique designs for the home and public spaces.

Fusion Stone is an easy and budget-friendly way to beautifully upgrade your home, inside and out. A patented Shouldice innovation, Fusion Stone is a thin stone veneer that is easily installed with the included stainless steel clips & screws. You just screw it to the wall and it’s “Hooked for Life”.

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Euro-Line Appliances has brought elite European engineered appliances to Canadian homes for over 25 years. Our brands exceed expectations and have earned awards in design, engineering, performance, and energy efficiency. All of our cooking, refrigeration, dishwashers, and laundry appliances are created to conserve our non-renewable resources.

SFA SANIFLO INC. (“SANIFLO”) is the only manufacturer of its kind in North America offering a complete line of macerating toilet systems for residential and light-commercial applications where installation of plumbing fixtures with below-floor drainage is impossible or cost-prohibitive.

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With over 90 years of experience, BLANCO is the leading kitchen sinks and faucets manufacturer. From handcrafted in Germany Steelart® sinks and the beauty of Silgranit®, to the European design faucets, BLANCO products are celebrated worldwide for their unmatched quality and design. Blanco Silgranit® sinks are proudly manufactured in Canada TRADE ONLY.

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